Please enable JavaScript.

Coggle requires JavaScript to display documents.

CH.10 PLANT ASSETS, NATURAL RESOURCES, AND INTANGIBLES (PLANT ASSETS (C1.…

- - - - purchase price, taxes, transportation charges, insurance while in transit, and the installing, assembling, and testing of the machinery and equipment.
    - - when purcghased purchase price, brokerage fees, taxes, title fees, and attorney fees.
      - construction for personal use materials and labor plus a reasonable amount of indirect overhead cost. ( Overhead includes the costs of items such as heat, lighting, power, and depreciation on machinery used to construct the asset. )Costs of construction also include design fees, building permits, and insurance during construction.
    - - additions to land that have limited useful lives :star: (parking lots, fences, walkways)
      - Land Improvement account so that their costs can be allocated to the periods they benefit.
    - - When land is purchased for a building site, its cost includes the total amount paid for the land, including any real estate commissions, title insurance fees, legal fees, and any accrued property taxes paid by the purchaser.Payments for surveying, clearing, grading, and draining.
      - Other costs include government assessments, whether incurred at the time of purchase or later, for items such as public roadways, sewers, and sidewalks.
      - the cost of removing the structures, less any amounts recovered through sale of salvaged materials, is charged to the Land account.
    - - :star:Plant assets sometimes are purchased as a group in a single transaction
      - allocate the cost of the purchase among the different types of assets acquired based on their relative market values,
  - - - :red_flag: Normally, depreciation assumes that the asset is purchased on the first day of the month nearest the actual date of purchase. In this case, because the purchase occurred on October 8, we assume an October 1 purchase date. This means that three months’ depreciation is recorded in 2016. Using straight-line depreciation, we compute three months’ depreciation of $450 as follows.
        
        straigt line depretiation x (month bought / 12)
    - - Computing Revised Straight-Line Depreciation
      - book value - revised salvage value / remaining useful life
  - - - They are recorded as expenses and deducted from revenues in the current period’s income statement.
    - - They are debited to asset accounts and reported on the balance sheet.
    - - :arrow_up: Debit repairs expense
      - :arrow_down: Credit cash
    - - :arrow_up:debit asset
      - :arrow_down: cash
  - - - :arrow_up: debit depreciation expense
      - :arrow_up: credit accumulated depreciation
    - - at book value
        
        :arrow_up: debit cash & accumulated depretiation
        
        :arrow_down:credit equiptment
      - above book value
        
        :arrow_up: debit cash & accumulated depretiation
        
        CREDIT: gain on equipmen :arrow_up:t & equiptment :arrow_down:
      - below book value
        
        :arrow_up: debit cash & loss on disposal of equipment
        
        :arrow_down:credit accumulated depreciation and equipment
  - - - allocating the cost of plant assets
      - accounting for expenditures ( repairs,improvements to plant assets
      - 1.computing the cost of plant assets
      - 4.recording the disposal of plant assets
- - - - what the value is at the end of its useful life
    - - length of time it is productively used in a company’s operations
        
        inadequacy :star: when the capacity of plant assets is too small to meet demand needs
        
        obsolescene :star: when a plant asset is no longer used for producing goods and services
    - - of all necessary expenses to acquire it and to prepare it for its use
- - - - :arrow_up: DEBIT : depreciation expense
      - :arrow_up: CREDIT :accumulated depreciation
    - - also : 100% / useful life
        
        straight-line depreciation schedule
    - - :red_flag:If the accumulated depreciation is 1800 and the cost is 10,000 at the send of the second year its book value is $6,400, which is $10,000 less $3,600 (2 years × $1,800),
  - - - :red_flag: For example, if depreciation per unit is 0.25 depreciation for the first year is $1,750 (7,000 shoes at $0.25 per shoe). Depreciation for the second year is $2,000 (8,000 shoes at $0.25 per shoe). :
    - - (2) accumulated depreciation is the sum of current and prior periods’ depreciation expense, and
      - (3) book value declines each period until it equals salvage value at the end of the asset’s useful life.
      - (1) depreciation expense depends on unit output